Ellen Pinchuk (as translated): Good afternoon, Mr Prime Minister. I am going to ask my questions in English, if you don't mind.

Vladimir Putin: All right.

Ellen Pinchuk: Mr Putin, our audience wants as much information from you as possible, so my first question is about Davos, where you are going to attend the World Economic Forum. What do you want to say to the world economic elites?

Vladimir Putin: I have been to Davos many times-four or even five-when I was working in St Petersburg. It is a good venue for informal meetings not only with my colleagues, governmental representatives, but also with businesspeople.

This is a special time we are going through. It is unusual due to the scope of the international financial crisis and its all-embracing character. I don't think international economic relations have seen anything like it throughout their history. So I think teamwork at such venues is extremely important. Everyone says it is necessary to pool efforts and together overcome the problems in the global economy and finance. I think we need to take a practical approach.

I will not talk about everything I am going to speak out on, but I can touch on certain things in this interview.

We talk about the need to join efforts and to work out common rules-what Russia thinks should be said. First of all, we should discuss setting common standards in the global economy, including its national sectors.

The countries of the European zone, the European Union, have arrived at certain rules for themselves and make it a point to comply with them-the budget deficit, for example. There are certain relevant agreements and targets. On the whole, however, the world has no such standards though they would be instrumental as stabilisers. Second, globalisation makes interdependencies so great that all countries are interested in such standards and even entitled to them, to an extent.

Here is a practical example to illustrate what I mean. Let's assume that Russia has almost a half of its gold and currency reserves in the American economy, so we are not indifferent to the amount of the US federal budget deficit in 2009. That's only an example. There are other parameters we could at least take into consideration if not coordinate. We realise full well that the world cannot have absolute agreements of the kind the European Union has, but framework agreements are possible even despite the differences in countries' economic and other development.

Next, we have every reason to talk about unification in the world financial markets. We can only regret that global stock exchanges have no unified rules-some are valid in New York, others in London, and still others in Hong Kong or Frankfurt. Clearly, it is impossible to unify this field fully.

But what have we seen in the previous years? It is competition between those venues for the greatest possible IPO and other securities flow. Regrettably, discipline has fallen-and we should not forget that securities issued by one of the regional exchanges spread all over the world. This is something to pay attention to. At any rate, it is high time to discuss this issue.

There are other questions concerning regional reserve currencies. There is a lot of talk today about the multi-polar character of the economy. What is meant is mainly prospects for establishing other reserve currencies in addition to the US dollar and the euro. In Russia we realise full well that declaration of a currency as reserve, even regional, is meaningless without economic development and diversification. It is quite possible, however, to speak of regional funds that could become a prototype for a unified economic policy in a particular region.

I heard again today about the discussion regarding a single Latin American currency. Experts say the yuan may qualify as the Asian regional reserve currency. The idea of a single currency is recurrent in many Arab countries. I repeat it is a long process. It may come true but it will take a long time, maybe 10, 20 or 25 years-I don't know.

As for development funds, the idea is plausible even today. For example, we have been considering the possibility of creating a small but efficient fund within the EurAsEC, a known integration agency. Russia and Kazakhstan are having talks about tentative investment with small contributions of other countries to be used for development.

We intend to discuss all that with our colleagues in Davos. By "we" I mean the Russian delegation.

Ellen Pinchuk: As far as I know, you are going to meet with the Chinese Prime Minister to discuss the post-crisis world, which has been announced as the theme of your talk. What are your views on the subject considering that Russia is not a key financial power and its economy is not sufficiently diversified? What do you think about Russia's role, and why, in your opinion, the global elite will reckon with Russia in Davos though it is not a financial centre?

Vladimir Putin: We are just going to say what we think. We don't expect everyone to sit up and agree with us straight away.

However, just as any other developing market, Russia is playing an increasingly important role in the world economy, and that is clear to everyone. That is why the leaders of the biggest world economies say that such elite clubs as the G8 are getting too narrow for global decision-making, and decisions made by such elite clubs cannot aspire to be universally practicable.

You have mentioned Russia just now, but there are also Brazil, China, India, South Africa and other dynamically developing world markets and economies with excellent prospects.

True, we have made economic diversification our goal only recently. On the whole, I think we have taken the right road and are reaching our targets at a fairly good pace. We'll make it, I am sure.

The global financial and economic crisis is helping us, in a sense, because it forces us to be more rational, implement new technologies (energy saving, for example), upgrade production and retrain the personnel. All that gives us hope that we will get out of the crisis more mature and with better development prospects.

As for our relations with the neighbouring countries-in particular, China, these contacts are of special significance to us due to an extremely long border and rapidly growing and diversifying trade.

Second, the world economic rehabilitation will add a new aspect to the natural benefits of our raw material economic sectors-oil, gas, metals and certain other traditional commodities. Here, too, we will shift to high technologies and so make another stride in national economic development in the post-crisis period.

Ellen Pinchuk: When will this post-crisis period start?

Vladimir Putin: That's what I was going to ask you. You have many staff analysts and an opportunity to meet with representatives of various world economies. We think positive trends will become evident late this year and in early 2010, and we hope some industries will see light at the end of the tunnel even in the middle of this year.

Ellen Pinchuk: I will tell you what I think about it when you interview me.

Vladimir Putin: All right, let's do it.

Ellen Pinchuk: A new administration has come into office in the United States. What do you think the Obama administration should do in its relations with Russia? What do you want it to do in relation to Russia and what, do you think, cannot be settled through negotiations?

Vladimir Putin: What cannot be settled through any negotiations are encroachments on our sovereignty. That is not up for discussion with other countries.

What we want is an honest dialogue between countries based on international laws and principles with due account for American and Russian interests.

Ellen Pinchuk: Is there a signal Obama could make even now to show that we are turning over a new leaf in relations many think the worst since the end of the Cold War?

Vladimir Putin: I don't think I can give any advice to the new US President. He knows better that he can do and deems it necessary to do.

However, what we have heard in the preceding weeks and even months gives grounds for cautious optimism.

We have heard signals concerning anti-missile defence, and we know that people close to Mr Obama say they should not hurry and the issue demands further analyses. We are glad to hear such statements. More that that, our proposal on developing those systems is still on the agenda. However, they demand team efforts.

As you may remember, we have proposed to make it a tripartite effort of the United States, Europe and Russia, implying equal access to control systems, which is of tremendous importance considering the existing threats.

Whatever might be said and done, such plans are still unilateral, and however much Europeans might be flattered, the United States is implementing them alone, though on European territory. Experts are very clear about that.

Positive signals on NATO enlargement have also reached us. We have paid attention to people close to the new US President saying that there are many ways to guarantee Ukrainian and Georgian security, not necessarily through NATO. We are glad to hear it and are willing to join any discussion on the best possible options for international security.

Non-proliferation and the anti-terrorist efforts are traditional fields of Russian-US partnership.

Despite all the problems you have mentioned, we came to agreements with the United States on the Iranian and counter-terrorist themes, and our partnership was very fruitful and cooperative in some of those fields. We would not like to see them forgotten or ousted into the margins.

However, we are discussing economic partnership now, and we have not given up the prospects of joining the World Trade Organisation. We will carry on talks with our American partners, and we hope they will support Russia's entrance to that international economic agency on standard and acceptable terms.

Ellen Pinchuk: The gas dispute between Ukraine and Russia, which resulted in disruption of gas supplies to 20 or so European countries, is a sensitive issue. Europeans feel hostage to this and similar situations. Was the affair worth all the criticisms poured at Russia? I don't mean to discuss who was to blame-but was the agreement worth all that criticism? The agreement has a 10-year term-but will it last? Or will we see the situation repeat itself?

Vladimir Putin: Europeans are hostage to the global situation following World War II, whose impact is felt to this day.

What happened with Ukraine in the recent years largely resulted from activities of the previous US administration and the European Union, which backed it. When street riots are used to help certain people come to power in violation of the Constitution, the country and nation whom these and similar events befall are doomed to lasting turbulence in domestic politics-and it was the domestic political situation in Ukraine that prevented us from reaching final agreements on the gas issue, too.

That's what the situation is like. We arrived at an agreement towards the end of last year, despite everything, on contracts in the gas sphere. You may be surprised, but we accepted the terms proposed by Ukraine at the end of the year-and as soon as we accepted them, they refused again. They did so solely for domestic political reasons. All of us-Russia and Europe-became hostages to that domestic political situation. The attempt to revise these agreements, now at the presidential level, is proof of what I say.

Now, was the agreement worth all the efforts? I think it was, because it is time to shift to normal and civilised market relations. Russia and its partners in Europe, who receive natural gas via Ukraine, are all interested in such relations. Paradoxically, Ukraine is interested in them more than anyone else-first, because they strengthen its sovereignty. A country cannot strengthen its sovereignty while retaining dependence on other countries in the vital sphere of energy. That should have been done long ago.

Last but not least, fuel prices are plummeting. Oil prices were the first to fall, and gas followed. As you know, gas prices follow the trend for oil prices with a lag of five to six months. Ukraine will not have a better time to switch to European price formation. It will hardly find a more convenient moment because natural gas prices will be calculated at the end of this year proceeding from current oil prices, so they will be rather low.

I think we should have gone through that time to level out the situation in the energy market-natural gas market in this case, and guarantee future stability.

Ellen Pinchuk: Let us go over to foreign investments.

According to just one study, $270 billion has left Russia since August, following the Georgian crisis and the outbreak of the global financial crisis.
There are other problems, too. In particular, what happened to TNK-BP and Shell casts doubt on Russia as a reliable corporate partner.

Do you think foreign investments play a prominent part in the Russian economy? What do you plan to do to bring direct foreign investments back?

Vladimir Putin: You have mentioned the events in the Caucasus, and then put TNK-BP and Shell right next to them. You've put it all together, although these are very different issues.

What happened in the Caucasus was connected with known events and Georgian troops attacking peacekeepers. It was rooted in a desire to suppress the small Ossetian nation by force. Russia remained true to international agreements and its duty to its own peacekeepers and Caucasian peoples. That came as another proof of Russia's determination to stand up for its national interests, sovereignty and right to uphold international laws-laws, I stress, that were not written by Russia alone but by the international community. We will do so in the future. We would like to see these rules complied with everywhere-in Europe, for example in Kosovo, and the South Caucasus, for example in the small republics of Abkhazia and South Ossetia. We would all act according to common rules instead of inventing beneficial options for ourselves time and again, which would open the road to chaos.

Now, let us go over to foreign investments.

We think that we are obliged to act according to international rules on the international scene. Foreign investors should proceed from the assurance that we will stand up for that stance everywhere. We consider it universal. We will proceed from compliance with the law which is, in the final analysis, the best guarantee of stability and reliability.

We attach great importance to foreign investments. Surprising as it may seem, direct foreign investments for last year were almost three times as large as those of 2007, even despite the crisis. The outflow you have mentioned is connected with venture capital or portfolio investment. Such money is intended for quick profit, so it comes and goes quickly.

There was another reason for the outflow. It is a well known reason-liquidity shortage in the banks of the United States, Europe and some other developed markets. Liquidity deficit started investment outflow from developing markets, Russia being no exception. We do not think it a reason for panic. There is something I would like to point out to you and to our potential investors. We think the capital outflow promotes confidence as we do not impose any limits on it, and we will not do so later.

The Russian economy is open. The rules we introduced on July 1, 2007, fully liberalise the financial market, and they stay valid despite financial hardships. We will treat foreign investors on a par with Russian. We protect their interests when they comply with the rules and laws of their host country.

We recently adopted a package of measures closely connected with investor protection, with an emphasis on foreign investors. We weighed the prospects for a drastic reduction or even abolition of lorry import duties in our transport operators' interests. We did not do so because the Kaluga Governor called a meeting I chaired to consider the interests of Volvo, which had made major investments in lorry manufacture. The company had its financial plans and counted on investment profits. We thought it was a reasonable demand, just as for some other automobile companies. That was not all. The electric industry also received sizable direct investments in the past several years.

We intended to raise tariffs during the economic boom. We had to slow down the growth rate of gas, railway and some other tariffs-but we did not touch the electric industry for investors to get their profits. We did not think it would hit the population as electricity is only 10% of total public utilities fees. We considered everything and, among other factors, took foreign and domestic investors' interests into consideration. We will always act in this way.

Ellen Pinchuk: When you were President, you worked in a growing economy for eight years. Now, Russia may enter recession for the first time since 1998. Are you concerned about what you will leave?

Vladimir Putin: Russia is not the only country with economic problems. Everyone knows and understands it. Russia has become part of the global economy, and that is good. On the other hand, the current crisis is the price we pay for our ardent desire to become part and parcel of the world economy. All Russian people realise that, I assure you. There is something I would like to say in this connection.

The balanced and reasonable policy of the recent years has made the Russian economy completely different from what it was in 1998. That is why we can afford a fairly mild treatment of the rouble exchange rate and why can keep all the social policy commitments we made during the period of economic growth.

I mean mainly grants and wage rises, for the most part in the budget-financed sphere. Here, I mean the federal budget, first of all, though the regions are following the federal centre. I mean keeping our promises to pensioners, the military, etc. The recession of ten years ago caught us unawares. Things are quite different now, though there are problems and we tell the nation about them. The safety cushions we prepared in previous years will make this bad stretch of the world economy much easier for us. It allows us recur to personnel retraining as one of the crisis and post-crisis remedies, and invest in that field of government activities, too.

We have already made a relevant decision and earmarked 43.7 billion roubles for it. We have joined hands with the regions to draw retraining curricula and make necessary allocations. If we keep our responsible attitude during the crisis, it will eventually improve our economic structure. But the government, of course, has to keep its commitments in the social sphere. Fortunately, we can afford it.

Ellen Pinchuk: All that restructuring might leave very few billionaires in Russia. Are you happy about that?

Vladimir Putin: I wonder why I have the reputation of a billionaire killer. That's all wrong. I was never out to exterminate billionaires-I just wanted everyone to abide by the law-that is, by rules normal countries adopt in a legal way through parliament. All citizens should comply with those rules which we know as laws.

It is good to earn a lot of money and acquire property if it is above board. The Acron plant, where we are now, has made only token personnel reductions. It is keeping jobs in an adverse situation, and does not forget about social welfare. The average monthly wage here is 21,000 roubles-not bad for this region and entire Russia. The company has good recreation facilities. 3,000 out of the entire 5,000 staff do sports regularly. As for the owners, they are quite well off. We support industrialists who have a sense of social responsibility.

Ellen Pinchuk: My next question concerns the securities market and the rouble falling against the US dollar and the Euro. Corporate debts accumulate and reserves run out while oil costs less than $50 a barrel.

Recent opinion polls show that Russians feel more exposed to unemployment than any other nation. New anti-crisis measures are clearly necessary. What will they be?

Vladimir Putin: The global financial and economic crisis has hit Russia very badly. The worst problems concern the metals industry, banking, retail trade and certain other economic sectors that were recently developing the most dynamically.

We remain optimistic, however, and we expect the global and Russian economy to recover step by step. As for the weakening national currency and its reserves, we have not done what some other countries have. We have avoided a major sudden devaluation. It has been gradual and precise. We are deliberately spending our gold and currency reserves and giving economic subjects, including private individuals, breathing space to see what is happening and make weighed decisions about how to keep their savings, in roubles, US dollars or Euros, or whether to spend money on property, or do something else with their savings.

We have been very sparing and careful about it. The recent Central Bank decisions connected with the weakness of the rouble are beneficial to the economy.

Take the company we are visiting today. Its managers say the company had been waiting for a momnt like this. I was barely paying its own way and now it is making profit. The situation is similar not only for other fertiliser manufacturers but for all export-oriented industries.

Corporate activities boil down to jobs. An overwhelming majority of Russians prefer our national currency, the rouble. To preserve their jobs and wages matters most to them, just as the survival of their company. We guarantee budget revenues at different levels-local, regional and federal, and keep our social commitments. That's all interconnected.

So balanced attitudes of the Central Bank to the rouble rate, anti-inflation measures of the Government and the Central Bank, and keeping the economic budget deficit within reasonable limits all belong to one set of measures.

There is another set of special measures. Its aim is to ease the tax burden. Here, we have changed depreciation charges and raised relevant bonuses from 10% to 30% to leave sizable funds at companies' disposal. We have reduced the profit tax rate from 24% to 20%, and authorised Russian regions to reduce tax for small and medium businesses from 15% to 5%. We have made many other decisions to recapitalise national finances. We have practically guaranteed liquidity to all our principal banks and established a system for painless bank mergers and acquisition of shares by the state when necessary.

All that put together and rapid adjustment to the labour market situation enables me to say that the state as a whole and the Government are prompt enough in responding to current developments, so we expect to see a positive effect.

Ellen Pinchuk: To continue, another small question: you have mentioned corporate consolidation and integration. Do you approve of it for the metals industry?

Vladimir Putin: I mentioned consolidation in the context of banking. It has long been necessary there. Compare the number of banks in Russia and in developed economies, and you will see that many Russian banks are redundant. But we do not impose integration on banks.

Let me finish with banking. It is essential. Regional banks understand their clients better. They get to every company. Many regional and local companies are accustomed to regional banks, so we do not intend to force mergers on them. We will support banks at the regional level, too.

As for industry, everything should happen naturally. We will interfere only when intervention is necessary to make Russian companies more competitive.

Ellen Pinchuk: Do you think it will be justified in the metals industry?

Vladimir Putin: I am not sure. We need to think about that. We have no ready decisions.

Then, what you have mentioned is an initiative of plant proprietors. But when two poor people get married they do not become any better off as a couple. So it all depends on every particular instance.

Mergers are reasonable for, let say, a company that has mineral resources with one that has a lot of money or good access to sales markets.

It is simple to pool two debtors together-but will it pay?

So we will be very discriminating about it. Our main goal is to make industry more competitive, I repeat.

Ellen Pinchuk: Mr Putin, you have many fans but also some enemies. Be that as it may, I think everyone would agree that you are among the most charismatic politicians today. If I may ask you several personal questions? What are you reading now?

Vladimir Putin: Karamzin's History of Russia.

Ellen Pinchuk: Which of the past leaders do you value the most, and why?

Vladimir Putin: Peter the Great and Catherine the Great because I don't think anyone else did more for Russia's progress.

Ellen Pinchuk: What was the last film you saw?

Vladimir Putin: Oliver Twist.

Ellen Pinchuk: Why?

Vladimir Putin: I wanted to see something serious.

Ellen Pinchuk: Which part of your job is the most fun?

Vladimir Putin: It's not really a lot of fun-I don't work at the circus. Your question has perplexed me. I wonder-I don't think my job often gives me occasions to laugh.

Ellen Pinchuk: Any fun moments about it?

Vladimir Putin: I don't think there are any. Your question might be the most fun.

Ellen Pinchuk: What takes you aback or makes you feel frustrated?

Vladimir Putin: Nothing. I sometimes feel overworked but never frustrated. I know there is a way out of every difficult situation, and I look for such ways. That's the most interesting part of my job.

Ellen Pinchuk: What is the best advice you have ever received?

Vladimir Putin: My mother told me never to ask for anything and never to complain.

Ellen Pinchuk: What can make you lose sleep?

Vladimir Putin: Emotional tension. But then, exercise is its best remedy.

Ellen Pinchuk: What is your worst drawback?

Vladimir Putin: Credulity.

Ellen Pinchuk: What are the temptations you succumb to the easiest? I, for my part, confess I eat more chocolate than is good for me.

Vladimir Putin: If it concerns eating habits, I have been an ice cream fiend since childhood.

Ellen Pinchuk: What is your motto?

Vladimir Putin: "Forward!"

Ellen Pinchuk: What was your best day like?

Vladimir Putin: They are all good because I have an interesting job. I really enjoy it. It's a big job, and a great deal depends on it. It is gratifying when I succeed and see that people's life is improving somewhat.

Ellen Pinchuk: What talent would you like to have most of all?

Vladimir Putin: An ear for music.

Ellen Pinchuk: What do you think you will be like after you retire?

Vladimir Putin: I have no idea. I think I would take up public law.

Ellen Pinchuk: How would you like to go down in history?

Vladimir Putin: It's up to history.

Ellen Pinchuk: Thank you.

Vladimir Putin: Thank you.